Banking News

The prospect of record low savings rates continuing is forcing many savers to review how they allocate their capital in an attempt to achieve the level of returns they have previously enjoyed. Investing in the stock market inevitably involves putting your capital at risk however there is a middle ground which continues to attract increasing interest – the structured deposit. With this in mind, we take a deeper look at this savings alternative to help understand why more and more savers are starting to see their appeal. more

With the current economic environment asking savers far more questions than it gives answers, it is good to know that there are alternatives available. We take a look at one such alternative that is proving particularly popular as savers face the harsh reality that the more traditional fixed rate savings products are failing to meet their needs. more

Millions of savers are facing the harsh realisty that there is little hope of change to interest and savings rates in the coming years. However, those with Cash ISAs do have one further option to consider – the ISA transfer. We take a closer look at why this is becoming a rising trend as well as what this could mean for those looking for the potential to improve the returns from their capital. more

With so many savers joining income investors in the hunt for high yields, being able to quickly understand and compare the numerous options available has become even more important. We therefore compare two of our most popular income investments to help understand what is driving their popularity and why they might meet your income needs. more

More taxpayer money needed to prop up banks says King

17 December 2008 / by Rachael Stiles

In an open letter to the Chancellor, the Bank of England Governor, Mervyn King, has said that the UK's banks will need further support if they are to start lending more freely to individuals and businesses.

The Bank of England chief suggested that the existing £500billion rescue plan announced by Gordon Brown in October and dramatic interest rate cuts are proving insufficient to solve the current banking crisis, intensifying rumours that a potential nationalisation of Britain's banks might be on the cards.

Mr King told Alistair Darling that "Additional measures, building on the Government's package to support the banking system announced in October, will probably be required to underpin lending to households and companies."

The letter was primarily about this month's drop in inflation, which has fallen back to 4.1 per cent in November, down from its peak of 5.2 per cent in September but still twice the target rate of two per cent; this time last year it was at 2.1 per cent.

The Governor said that the previous spike in inflation was due to the sharp increase in the global price of commodities such as food and energy, with oil prices rising more than 50 per cent between January and July and the average price of a grocery shop soaring 30 per cent.

Similarly, the recent movements in the commodity markets where prices have dropped back down significantly have slowed inflation; oil and food prices have fallen more since the summer than they rose in the first half of the year, by 66 per cent and 40 per cent respectively, and Mr King expects the recent movements in Consumer Price Index (CPI) inflation to continue in the coming months as global wholesale prices continue to fall.

This could potentially lead to deflation in 2009, he warned the Chancellor, and said that next year he might not have to write further open letters to explain why inflation is above the target rate, but rather to explain why it is below the target rate.

"It is possible that I will not need to write a further open letter to you in three months time." he said. "Indeed, given the shortterm outlook for inflation, it is quite possible that I will next need to write to you to explain why inflation has deviated by more than one percentage point below the target during 2009."

Meanwhile, the US Federal Bank has moved to cut interest rates to their lowest-ever level of 0.25 per cent, as it attempts to boost lending and lift the world's biggest economy out of a deteriorating economic situation.

"Since the Committee's last meeting, labour market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined." the Federal Reserve said in a statement.